Qubix Systems produces two different products, Product A, which sells for $250 per unit, and...

Qubix Systems produces two different products, Product A, which sells for $250 per unit, and Product B, which sells for $400 per unit, using three different activities: Design, which uses Engineering Hours as an activity driver; Machining, which uses machine hours as an activity driver; and Inspection, which uses number of batches as an activity driver. The cost of each activity and usage of the activity drivers are as follows:

	Cost	Usage by Product A	Usage by Product B
Design (Engineering hours)	150,000	100	150
Machining (Machine hours)	1,000,000	2,000	3,000
Inspection (Batches)	80,000	50	30

Qubix manufactures 10,000 units of Product A and 7,500 units of Product B per month. Each unit of Product A uses $100 of direct materials and $45 of direct labor, while each unit of Product B uses $140 of direct materials and $75 of direct labor.
Required:
a. Calculate the Design activity proportions for Products A and B.
b. Calculate the Machining activity proportions for Products A and B.
c. Calculate the Inspection activity proportions for Products A and B.
d. Determine the indirect costs assigned to Product A.
e. Determine the indirect costs assigned to Product B.

f. Determine the manufacturing cost per unit for Product A.
g. Determine the manufacturing cost per unit for Product B.
h. Determine the gross profit per unit for Product A.
i. Determine the gross profit per unit for Product B.

Expert Solution

	A	B	C	D = B+ C	E = A/D	F = B x E	G = C x E
	Cost	Usage by Product A	Usage by Product B	Total Usage A + B	Cost Per Usage	Activity proportions for Products A	Activity proportions for Products B
Design (Engineering hours)	150,000	100	150	250	$ 600.00	$60,000.00	$90,000.00
Machining (Machine hours)	1,000,000	2,000	3,000	5000	$ 200.00	$400,000.00	$600,000.00
Inspection (Batches)	80,000	50	30	80	$ 1,000.00	$50,000.00	$30,000.00
Total manufacturing overhead costs						$510,000.00	$720,000.00
Divide by number of units						10000	7500
Manufacturing overhead cost per unit						$51.00	$96.00

	Product A	Product B
a. Calculate the Design activity proportions for Products A and B.	$60,000.00	$90,000.00

b. Calculate the Machining activity proportions for Products A and B.	$400,000.00	$600,000.00

c. Calculate the Inspection activity proportions for Products A and B.	$50,000.00	$30,000.00

d. Determine the indirect costs assigned to Product A.	$510,000.00

e. Determine the indirect costs assigned to Product B.	$720,000.00

f. Determine the manufacturing cost per unit for Product A.
Direct Material	$100
Direct Labour	$45
Manufacturing overhead	$51
Product A Total manufcturing cost per unit	$196

g. Determine the manufacturing cost per unit for Product B.
Direct Material	$140
Direct Labour	$75
Manufacturing overhead	$96
Product B Total manufcturing cost per unit	$311

h. Determine the gross profit per unit for Product A.
Selling Price	$ 250
Less : manufacturing cost per unit	$196
Gross profit per unit	$ 54

i. Determine the gross profit per unit for Product B.
Selling Price	$ 400
Less : manufacturing cost per unit	$311
Gross profit per unit	$ 89

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